No early takeoff for FDI by foreign carriers in aviation

NEW DELHI: The government's proposal to allow foreign airlines to invest in fund-starved desi carriers may get held up indefinitely. The proposal is likely to be opposed by Mamata Banerjee's Trinamool Congress and, in all probability, will be put on the backburner.

Trinamool has already dropped hints that it may oppose this policy, which some Indian carriers fear would go against their interest and leave them vulnerable to hostile takeovers by cash-rich foreign carriers. "This is a sensitive issue. I don't want to comment on it and would rather leave it to our party chief to take a final decision," said Partha Chatterjee, a Mamata confidante and West Bengal's industry and commerce minister . The party's leader in Lok Sabha, Sudip Bandopadhyaya, also refused to comment on this issue.

Airlines opposing FDI by foreign carriers are also learnt to have raised the issue of security concerns surrounding funds from certain specific regions flowing into the sensitive aviation sector. What adds to the uncertainty is the fact that there is no unanimity within the government's various ministries on the upper limit of stake that foreign carriers can pick up.

Now key ministers like Pranab Mukherjee, P Chidambaram , Anand Sharma and Ajit Singh are learnt to be working on a consensus on all aspects of this issue, like the percentage of stake which foreign airlines may be allowed to pick up. Also, the issue is unlikely to be discussed this week as both Mukherjee and Anand Sharma are out of the country . The delay is bad news for cash-strapped airlines like Kingfisher that are awaiting funding to stay alive. Air India, whose financial health is no different from Kingfisher, has got a Rs 30,000-crore lifeline from the government.

"Kingfisher's current operations of about a daily 100 all domestic flights is supposed to be a holding pattern which has to improve. Otherwise the airline cannot continue like this for too long," said sources. Kingfisher chief Vijay Mallya is making a desperate push for early passage of this policy. Apart from his crisis-ridden airlines, the other beneficiaries of this change are going to be SpiceJet and GoAir. Jet Airways and IndiGo, the two airlines opposing this policy, are unlikely to benefit as their foreign holding is already close to proposed FDI's upper limit.